Fintech star gets 7 years for defrauding JPMorgan Chase out of $175M — why it took the bank 1 year to figure it out
Charlie Javice, the entrepreneur who was convicted earlier this year for defrauding JPMorgan Chase out of $175 million, was recently sentenced to seven years in prison.
The founder of a student financial aid startup called Frank, Javice sold her company to JPMorgan Chase in the summer of 2021. At the time, it was believed Frank had more than four million customers, and around 300 bankers at JPMorgan Chase vetted the purchase before it was finalized. (1)
However, Javice was convicted on charges of conspiracy, bank fraud and wire fraud after she was caught falsifying records in order to boost her customer base. In reality, Frank had fewer than 300,000 customers. (2)
Javice’s lawyers argued that her sentence should be as little as 18 months, claiming that a major bank like JPMorgan Chase could easily afford to lose $175 million, and that 300 analysts had approved the sale without raising red flags.
The sale, according to Javice’s lawyers, pitted “a 28-year-old versus 300 investment bankers from the largest bank in the world.” However, U.S. District Court Judge Alvin K. Hellerstein had little mercy for Javice, even if she managed to con hundreds of bankers.
“Whether you outsmart someone who is indifferent or someone who is careful, it’s the conduct,” said Judge Hellerstein. “Fraud remains a fraud, whether you outsmart someone who is smart or someone who is a fool.”
Before completing the sale, Javice had spreadsheets that contained details on Frank’s alleged four million customers. These spreadsheets reportedly included falsified phone numbers, home and email addresses, personal financial data and Social Security numbers.
As Business Insider reports, JPMorgan Chase asked for access to the spreadsheets before completing the purchase, but Javice had issues with the bank’s request and didn’t agree to deliver them. Javice reportedly cited privacy concerns over sharing the personal data of Frank’s users. (1)
But that didn’t stop JPMorgan Chase from finalizing the purchase. One year after the bank spent $175 million to acquire Frank, analysts at JPMorgan Chase finally discovered that Javice’s data had been falsified.
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